Rebuild the local economy: prioritise labour-intensive sectors, difficult to automate, impossible to relocate abroad

Colin Hines, co-founder of LWM and convenor of the UK Green New Deal Group, comments on the Guardian’s recent editorial on productivity and robots which ‘repeated the cliché that automation does cost jobs, but more are created’.

He says that the problem with this is that the new jobs are frequently in different places from where they are lost and require very different skills, hence exacerbating the problems for the “left behind”.

Also unmentioned was that just as automation is starting to really bite, the world faces a strong possibility of another serious credit-induced economic downturn, from China to the UK and a perfect storm of domestic unemployment soaring and export markets falling, as happened after the 2008 economic slump.

The answer to these problems has to be a shift of emphasis to rebuilding the local economy by prioritising labour-intensive sectors that are difficult to automate and impossible to relocate abroad.

Two sectors are key:

  • face-to-face caring from medicine, education and elderly care
  • carbon-reducing national infrastructural renewal.

This should range from making the UK’s 30m buildings energy efficient, constructing new low-carbon dwellings and rebuilding local public transport links.

Funding could come from fairer taxes, local authority bonds in which all could invest, green ISAs and a massive new green infrastructure QE programme.

This approach should become central to all political parties, set out in their next election manifestos because “jobs in absolutely every constituency” is the crucial vote-winning mantra.

 

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Sheffield and Balsall Heath: the real march of the makers

julian dobson2The observations of Julian Dobson (Living With Rats blogspot @juliandobson), strike a welcome and hopeful chord after reading the dismal question: “Will Chancellor Osborne cripple the ‘makers’?”

A search revealed JD’s substantial localist credentials – as director of Urban Pollinators, which helps to make sense of regeneration and the editorial director of New Start, the national magazine for regeneration practitioners. He is on the editorial board of the journal Local Economy and writes think tanks and publications such as the Joseph Rowntree Foundation, the Centre for Local Economic Strategies and Res Publica. He is helping to create Our Society, a social action network, and Revive Our Town Centres, a network for people involved in rethinking local high streets.

george osborne 2 smallerChancellor George Osborne closed his 2011 Budget speech by eloquently setting out his aspiration for “a Britain carried aloft by the march of the makers”. But recently he caused consternation by closing down the Business Growth Service, including the Manufacturing Advisory Service and the Growth Accelerator programme.

Julian observes that if there’s going to be a march of the makers, it is more likely to take the form of developments such as Portland Works in Sheffield, a stone’s throw from Sheffield United’s Bramall Lane ground, a development born of “a local determination to see Portland Works kept in use as a place for making”.

He relates that a community trust was formed when the previous owner wanted to cash in and convert the premises into flats: more than 500 people bought into a community share issue, reflecting the groundswell of support both for the works’ heritage and the trust’s vision of the future”.

portland works

Portland Works currently has 32 tenants with a wide spread of interest, including a knife maker, engraver, forge operator, several artists, a rug maker, a window maker, a distiller, bike-makers, woodturners, musicians and jewellers.

Though both are beset by the difficulties of maintaining an old building, a similar pattern can be seen in Birmingham (below, rear view) at The Old Print Works in Balsall Heath – first mentioned on this site in 2013 – where ‘makers’ work in low-cost spaces.

old print worksFollowing his account, Julian Dobson concludes:

“If there’s going to be a march of the makers, it is more likely to look like this than the kind of projects favoured by central government and its placemen in local enterprise partnerships, obsessed with projects that rejoice in titles like Catapult and Accelerator.

“It is likely to be a much slower march than the periodic stampedes of real estate and financial services speculators, too. But it has the potential to last far longer and to create more useful stuff in the process.

“And while there’s no doubt that the makers of Portland Works are having to rough it far more than government ministers and their acolytes might be used to, I’d hazard a guess that their work is both more creative and more fulfilling”.

Co-operatives: raising and developing the weakest part of our local communities and civil society?

The roots of the co-operative movement in Italy go back to 19th century workers’ associations, with credit services, agricultural and building co-ops forming an important part of the overall economy. There are more than 20, 000 cooperatives, including housing and banking movements, with over 3 million members.

In 2011 Jeffrey Hollander asserted that the success of worker cooperative models in Italy and Spain presents US & UK with a compelling model for building a new, sustainable economy: 

italian co-ops text pics

An alternative to the “throw-away culture created by the powers that control the economic and financial policies of the globalized world”

Reuters reports that Pope Francis, speaking to members of the Confederation of Italian Co-operatives, condemned economic systems that “suffocate hope” and a globalised culture that treated its employees as disposable. New models and methods are needed that offer an alternative to the “throw-away culture created by the powers that control the economic and financial policies of the globalized world.”

He adds:

“Co-operatives should continue to be the motor that raises and develops the weakest part of our local communities and civil society”

The Pope said that the establishment of more co-operatives could help to solve crises of unemployment among young people and offer women jobs with a work-life balance that enabled them to care for their families.

Finally he called for money to be ‘at the service of life, managed in the right way by real co-operatives where capital does not command men but men command capital.

Preston: building a new local economics

new start logoNew Start magazine, which champions urban regeneration that is inclusive, sustainable and socially just, has reported on the work of CLES (Centre for Local Economic Strategies) with Preston City Council. Innovative Quinton councillor John Clancy, who has been to Preston to meet councillors there at a CLES conference, has already tweeted the New Start article.

CLES is exploring how anchor institutions based in the city can bring benefits for the local economy and community.

Anchor institutions are those that – once established – tend not to move location, anchoring the local economy. They may be not-for-personal profit social enterprises, co-operatives, employee-owned and run companies,  or simply local firms with a determined loyalty to their community and workforce ‘family’ (some 2nd generation) – like Professional Polishing in 2007, which refused a highly profitable offshoring opportunity for this reason – resigning from BCC because of their promotion of these policies – and has gone from strength to strength.

cles logoThe starting point was ‘procurement spend’ – seeking to create a collective vision across institutions for undertaking procurement in a way which benefits the local economy. The supply chains of each of the anchor institutions (worth £750m pa) were analysed by CLES in order to identify particular sectors where there are gaps in expenditure in the local economy and where there is scope to influence that ‘spend’ in the future.

There were two broad objectives:

  • to analyse the extent to which anchor institutions already spend with suppliers based in the Preston and Lancashire economies and whether there is potential to repatriate some of that spend;
  • to identify whether there are any particular services used by anchor institutions which would lend themselves to future delivery by local worker-led co-operatives.

Analysing the procurement spend of six anchor institutions with their top 300 suppliers – some £750m – the research found that only 5% of their collective spend was with Preston organisations and 39% was spent with organisations based in Lancashire. £488m was effectively leaking out of Lancashire each year.

Preston skyline
Preston skyline

The findings of the supply chain analysis have prompted anchor institutions to ensure procurement spending reaps greater local economic and community reward. Local organisation Community Gateway, for instance, now asks suppliers to show the local economic multiplier effect of the delivery of its capital and maintenance projects.

Preston Council has identified local organisations in those sectors which could bid for and deliver those services in the future.

Lancashire Council has reframed its procurement practices so that there is greater emphasis on economic and social value.

Postscript: other initiatives

  • Living Wage – Preston City Council has been a Living Wage employer since 2009. It seeks to ensure other organisations across the public, commercial and social economies pay their own employees. The principle of the activity links to community wealth in that it seeks to provide a fair level of pay for Preston residents and also ensure the circulation of income within the local economy.
  • Move your Money – Preston City Council has become part of the Move your Money campaign. This seeks to encourage communities to bank in a more ethical way. The Council has also helped establish a new credit union (‘Guildmoney).

• Guild co-operative network – the council and its Social Forum supports worker led co-operatives and encourages other anchor institutions to utilise local co-operatives, most of which are engaged in front line provision.

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Think global, act local – H.T. Brigham, Coleshill

htbrigham

Where did you buy your groceries from this week? Did you visit the independent traders on your local high street, or the one-stop-shop supermarket just down the road?

Which you choose will probably come down to several factors including, price, quality, variety, convenience, and not least, whether you even have a local high street anymore.

We are often told about the benefits of sourcing locally for the local economy, the environment and for ourselves. In reality, we probably end up striking a balance between the two, in order to get the variety of goods we need, at the price that we want to pay, whilst still sourcing more specialist items from local suppliers . . .

This is certainly true for HT Brigham. In fact, even though HTB supplies metal components on a global scale, the emphasis on sourcing locally is probably more prominent than you may expect.

And why not? The benefits of having a localised supply chain can be considerable and with over 70 % of HTB’s suppliers based in the West Midlands area, we are taking full advantage of the skill base which is right on our doorstep.

One major benefit for businesses who decide to source locally is undeniably in the area of logistics. At a time when the trend for OEM’s sourcing from the Far East appears to be reversing, it is obvious that there is more on the purchasing wish list than just cost:

  • In business, time can often be in short supply, making supplier response crucial. The focus on time to market, quick turnarounds and short lead-times is extremely prominent. A local company which will take less time to deliver the goods required, at a lower logistical cost than a company which is further away, may well have the edge.
  • On top of shorter lead-times and lower delivery costs, our local suppliers can often provide a more responsive service too. Their locality means that they can be more reactive to our changing demands and any urgent requirements which we may have.
  • They are also able to be more flexible with batch sizes and delivery schedules, as well as being able to act responsively to rectify any issues, should they occur.
  • In addition, the relationships which form between companies within a close knit supply network can be extremely valuable. With simple chains of communication, personal contact and simply being near by, local suppliers can often work closely with customers, providing a level of support which can make all the difference.

On occasion, there may be reason for some degree of caution. It may be convenient and comfortable to choose a supplier based just down the road or which you have used for forever and a day, but what if that supplier is not competitive on price or quality? We cannot allow our local suppliers to become complacent. Keep them on their toes with regular benchmark exercises.

made in the midlands header

HT Brigham is a founding member of the Made in the Midlands initiative, a business network representing approximately 250 manufacturing SMEs in the Midlands area. The group acts as a platform for firms to source and supply with each other, and collaborate in order to improve their businesses. HT Brigham is actively practicing this ethos, having recently embarked on a significant expansion programme, to accommodate an increase in workload from the USA.

With work being awarded to Midlands based architects and contractors to complete this expansion, the knock on effect from this increase in revenue from overseas, will filter through to the local economy, with the benefits being kept in the Midlands.

 

 

Read in full: http://www.htbrigham.co.uk/blog/2014/01/think-global-act-local/

Swadeshi movement, which ‘prefers the neighbourhood over the remote’, affects Indian government policy

 

swadeshi jagran manch header
New Delhi Television online reports that the Swadeshi Jagran Manch and a farmers’ organisation met India’s Environment Minister today to protest against the go-ahead given by the Genetic Engineering Approval Committee on July 18 to field trials of 15 GM crops, including rice, mustard, cotton, chickpea and brinjal. The Environment Minister, in a statement issued later by the SJM said “the decision about field trials of GM crops had been put on hold.” More on this issue here.

The writer met several SJM members in India and was prompted by this report to summarise their approach.

Swadeshi believes that the unbalanced individualism of the West is destructive of community living. The individual requires the mutually complementary and interactive relationship of the community.

The market has to be an instrument and not the master of the people. The smaller the size of the market, the better. The Swadeshi approach is to limit the size of the market not to eliminate it as communism does. The Swadeshi global view is ” let a thousand markets bloom – not merge into one global market “.

Swadeshi prefers the neighbourhood over the remote and accepts only need-based transnationalism.

It prioritises the satisfaction of practical human needs – food, clothing, housing, education, healthcare, drinking water, energy and transport – values frugality, savings, thrift etc. and seeks to remove the distortion of defining economics as multiplication of wants and efforts to satisfy them, powered by greed.

Swadeshi advocates that income-inequalities remain within reasonable limits. Like the early co-operatives, it believes that the ratio of income of the top 20% and bottom 20% should not exceed 10:1.

The Swadeshi philosophy is not against creation of wealth – merely an injunction against unlimited consumption; a mandate for conservation and preservation of national assets and resources; an emphasis on personal and family savings and an injunction against wasteful and needless expenditure.

Greater…. – a role model for Birmingham ?

Cities offering themselves as sites for foreign manufacturing companies to make and sell into  their national market can be found all over the world today.

A hundred years ago only one city was systematically doing this in Europe. But far from being a road to prosperity, that city was not one of the few that can claim to have avoided the depression of the interwar years.

And if that city, and it was a British city, saw questionable benefit; it cannot be Victorian Town Hallsaid that the national economy benefited either.  Quite the contrary.

A century of experience

In 1914 the biggest automobile producer in Europe was one of the US giants, and it had been based in this English city since 1911. And although it was used as a base for exporting into Europe, such production would hamper emerging British automotive  producers more than it would hamper Citroen in France or Opel in Germany.

The City in question here was certainly not Birmingham. The political and business leadership of this city would never have gone seeking foreign inward investment. Their answer to the American and German industries taking their customers was to seek to foster the British Empire as a preserve for British exporters. This was what lay behind the Tariff Reform campaign loudly launched by Joe Chamberlain in 1903. This protectionism became known as the ‘Birmingham economics’ as it came to be the official policy of the Conservative and Unionist parties.

Greater_Birmingham_reducedThe Birmingham label would have been prompted by memories of the Victorian Prime Minister Disraeli. He had led the resistance to the huge urban movement to scrap customs duties designed to protect British agriculture. To Disraeli, Manchester was the main base for this free trade philosophy which he called ‘Manchester economics’.

As Chamberlain’s scheme became central to the national debate it got dubbed the Birmingham economics. It seemed the opposite to Manchester… And Manchester between 1905 and 1914 seemed to be the base for the key opponents of Chamberlain’s ideas.

Manchester, it was also, who had offered themselves as a base for Ford Motors of Detroit in England and its markets.

Manchester Economics

Having built a ship canal all the way from Liverpool to Manchester was the basis of Nicholls Trafford Parkthis offer. And then an industrial estate was built on the edge of the conurbation by the people who built the canal.  This brought in mainly US companies. This estate has since been called Trafford Park. And it was all done in the decade before Chamberlain’s protectionism debate.

Westinghouse, the US electrical giant, as well as Esso were there before Ford. More details of these companies can be found here.

By 1910 the opposition to Chamberlain was mainly voiced by the Liberal Party for whom the Manchester Guardian was the regimental bugler. The Manchester Liberals brought their resistance to the Chamberlain agenda to a crescendo during December 1909 as part of the election campaign over Lloyd-George’s ‘People’s Budget’.

The Liberal establishment  rallied at Manchester’s town hall (Free Trade Hall), and the key note speech was carried almost verbatim  by the Guardian, whose editor sat along side the cabinet minister who was making the key note speech.

Archive Logo ‘  Why,   what is the Manchester Ship Canal ?  It is a channel to enable foreign goods to be imported cheaply into this country; –  ( Hear. hear )   It is a tube to bring dumping into the very heart of our national life. And you have built it: you have built this canal yourselves; you have built it at great cost; you have dragged the Trojan horse within your own walls yourselves – (cheers).  But more; you have grown fat in the process of committing this extraordinary folly.’

Whether the cheering audience were aware that the minister had substantial shareholdings in the US railways that brought US goods to their embarkation, we do not know. But they might have had some idea. It was well known that the speaker’s mother was daughter of a Wall St speculator.

Our cabinet minister had already represented two seats in what is now GreaterYoung_Winston Manchester.  The very first of which was Oldham, as those who have seen Richard Attenborough’s film of his early life may recall.

But by 1909 he had lost both these seats and sat for Dundee. But ‘Manchesterism’ had no more ferocious champion, so he still had centre stage at Free Trade Hall that December. Later his son Randolph would sit for neighbouring Preston and our speaker’s grandson also called Winston would be both MP for Stretford until 1997 and on the board of the Trafford Park company itself – part of which lay in his constituency.

Downfall of Birmingham

Had a few things not gone so well for Hitler at the start of 1940, it was never inevitable that Chamberlain would have been ousted from leadership of the UK.

Then the Birmingham model of economic development would not have been so systematically forgotten as Churchill becomes a national icon.

Berrow CourtWe have already done an outline of how the business forces behind Chamberlain and Baldwin in the 1920s and 1930s pursued regional and national priorities. But much of this is totally forgotten today, even in Birmingham. Hence it could be thought that there had never been any alternative to looking to foreign and US investors for the country’s future.

But there was. Manchester was never convinced by Churchill and the liberals. Manchester voted Churchill out, and Chamberlain supporters could win in Manchester. But Manchester economics never had any traction in Birmingham. Churchill was actually President of the Board of Trade when he was finally voted out in Manchester.

A model for economic development ?

By the 1920s Manchester was an economically distressed area. Ford moved out in 1931. Birmingham’s home-grown automotive companies were only just beginning to become significant both in Birmingham and the national economy.Shameless At the beginning of the current century it is hard to say Manchester was fat for long. In popular culture, Manchester is known for foreign-owned football, but otherwise Coronation St and Shameless.

However, the West Midlands is now being pressed to re-style itself as a Greater Birmingham in the quest for profile with overseas capital. But unless one is so close up to it that one cannot see the wood for the trees, can anyone really see that many lessons for Birmingham coming out of Greater Manchester?

Fifty years ago no one would think to find much that Birmingham could learn from Manchester in terms of economic development.  That they might now think they can, may well be because Birmingham now has no more idea of how to give a lead to the business sectors of provincial England than Manchester ever did.

Andrew Lydon

 

Energy security, using devices manufactured in this country

prof john a mathews 2Professor John A. Mathews’ areas of expertise include semiconductors, flat panel displays and new energy industries, solar photovoltaics and LEDs.

He wrote in the Financial Times:

“A quite different version of “energy security” involves reliance on the power generated by renewable devices – wind turbines, solar cells – that are manufactured in the country itself.

“What you make is yours, forever.

“Provided a country has abundant resources of renewable energy – wind, water, sunshine –  making itself independent in power needs by manufacturing its energy systems is the best guarantee of long-term (as well as medium-term) security.

“By contrast, continuing dependence on fossil fuels (even alternatives such as shale oil or gas) locks a country in to eventual diminishing returns.

“Adopting the alternative “security through manufacturing” approach has the convenient aspect that it would help to revive manufacturing centres . . .

“And it has the added convenient feature that it reduces the country’s carbon emissions”.

Professor Mathews currently holds the Eni Chair of Competitive Dynamics and Global Strategy at LUISS Guido Carli University, in Rome, and Chair of Strategy, Macquarie Graduate School of Management, Macquarie University, in Sydney.

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Should we learn from countries whose companies own our energy providers?

Celia Richardson, director of the Social Economy Alliance, is the lead signatory of a letter in the Financial Times.

 social economy alliance logo

The Alliance was launched by Social Enterprise UK, a coalition of leading social economy organisations, in order to influence the way political parties formulate social and economic policies before the next General Election and increase the impact of the social economy.

ResPublica 9.13 report coverWelcoming Ed Miliband’s focus on energy, she referred to the growing community energy industry in this country where neighbours are collaborating, creating jobs and ‘growing their social capital’.

The latest publication from ResPublica suggests that community energy could grow to eighty-nine times its current size if existing barriers were lowered. The letter continues:

‘Other countries, whose companies own our energy providers, are developing their own community energy and renewables at a fast pace, while the UK suffers – we could learn from their domestic policy.

 

‘Energy is where Britain can tackle serious economic problems at the same time as tackling social problems, as well as our large and growing democratic deficit’.

NOTE

Social enterprises are businesses that trade in order to address social problems, improve communities, people’s life chances, or the environment.  They sell goods and services in the open market, but reinvest their profits back into the business or the local community.

And so when they profit, society profits.

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Should QE now be used for the common good – extending and adapting the work of Birmingham Energy Savers?

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Quantitative Easing currently benefits the non-bank financial sector, commercial banks and the Treasury

HansardUnder QE, Hansard evidence informs us, the Bank of England’s Asset Purchase Facility purchase of just under £375bn of government bonds from the non-bank financial sector has led to a lowering of long term interest rates. The non-bank financial sector and commercial banks now hold more liquid assets in the form of interest-bearing reserves.

The consequent reduction of borrowing costs for the government means that debt issued or re-financed since 2009 has been substantially cheaper, saving some £50bn in immediate funding costs.

But QE could be used directly for the common good: MP Caroline Lucas:

Caroline Lucas 3“There is huge, and as yet untapped, potential in renewable energy, energy and resource-use efficiency and the transformation of our transport system that would create high-quality jobs across the country and reduce the UK’s overall ecological impact.

“If we are serious about staying below 2C warming, as we have legal obligations to do, then to invest in a destructive Dash for Gas when there is a Green New Deal on the table borders on criminal negligence by my parliamentary colleagues.”

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GND logo

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This is the National Plan advocated by the Green New Deal Group: Larry Elliott of the Guardian, Tony Juniper, formerly FOE’s director, Jeremy Leggett of Solarcentury, Richard Murphy Tax Justice Network, Ann Pettifor of NEF and Debtonation, Charles Secrett, currently working with ELF, Triodos Bank and London’s Development Agency and Wildlife Trust, MP Caroline Lucas, Andrew Simms director of NEF, and the convenor Colin Hines, LWM co-founder and Co-Director of Finance for the Future.

Birmingham Energy Savers

birmingham energy saversEarly beneficiaries of Birmingham Energy Savers’ (BES) activities gave testimony of the positive impact the innovative scheme is having on their lives at its official launch event at The Council House in February.

It was attended by local people helped out of long-term unemployment, residents that are now enjoying warmer homes plus lower energy bills joined representatives of Birmingham City Council, who originated the scheme, and its delivery partner Carillion Services.

If such schemes could be more widely implemented and adapted for use all over the country, welcome social, economic and environmental benefits would be offered to most people – but minimal ‘rich pickings’ for the few.


STOP PRESS

In similar vein, Fran, Ben, Andrew, Mira and rest of the team at Positive Money urge:

“Get the Bank of England to create new money instead. This new money would be granted to the government, who would spend it into the real economy where it can create jobs and support businesses”.

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